Heledd Fychan Canol De Cymru - South Wales Central

“Further proof that Labour’s partnership in power is actively harming Wales” – Heledd Fychan MS

During questions to the Cabinet Secretary for Finance yesterday (Wednesday 5^th June 2025), Heledd Fychan MS uncovered that local authorities and other public sector organisations in Wales will have to absorb the remaining shortfall in the compensation for increases to employers’ National Insurance Contributions.

In response to Ms Fychan, Mark Drakeford confirmed that the Welsh Government’s use of reserves to fund the £72m shortfall in compensation for public sector organisations in Wales, and the UK Government’s £185m, will only cover 86% of the cost. Local authorities and other public sector organisations will have to fund 14% of the shortfall themselves.

In 2025-26, local authorities in Wales face a combined deficit of £560m.

Plaid Cymru’s Heledd Fychan said the “situation could not be more serious” and that communities and public sector organisations in Wales still face the “brunt of Westminster decisions” despite Labour’s promise of change.

Plaid Cymru WLGA leader, Cllr. Darren Price, said it is “totally unfair” that local authorities are having to “bail out the UK Government” and warned it could lead to more service cuts or increased council tax.

Responding, Plaid Cymru spokesperson for Finance, Heledd Fychan MS said:

"If you needed any further proof that Labour’s so-called ‘partnership in power’ is actively harming Wales, then this is it.

“Not only is Welsh Government having to use its reserves to fund half of the shortfall in compensation from the UK Government for its increase to employers’ National Insurance Contributions, but local authorities will now have to absorb the remaining increase themselves – at a time where their financial situation is already so dire.

“This situation could not be more serious. Wales was promised that two Labour governments working together would bring meaningful change – but it’s clear that our communities and our public services are still facing the brunt of Westminster decisions.”

Plaid Cymru WLGA leader and Carmarthenshire County Council leader, Cllr. Darren Price said:

"This confirmation from the Cabinet Secretary for Finance is another blow to local government. Local authorities are already stretched financially - the fact that we will now have to bail out the UK Government is totally unfair.

“What is unacceptable is that we don't know if we will be compensated for the increase to employers' National Insurance Contribution next year onwards, or if we'll be expected to absorb the costs again - either partly or fully. If this isn't sorted, finding additional money will either mean further service cuts or increased council tax for people in our communities.“